What’s Your Tax IQ?

Written by Team Optimity

(3 min read)

When it comes to your income taxes, are you a do-it-yourself tax wiz, or do you prefer to let a professional take care of it all? 

Do you know the difference between a T3 and T5? Do you know which expenses related to working from home you can, and cannot, claim on your taxes?  

Well, we were curious too, so we teamed up with Wealthsimple, one of North America’s leading financial technology companies, to find out just how knowledgeable Canadians are when it comes to basic income taxes. 

Over 64% of respondents could not correctly identify all the sources of taxable income.

The Scope and Scale of the Survey: 

We leveraged Optimity’s ability to conduct first-party data collection (i.e. we can survey our app users directly through the app), and asked 31,000 of our app users 6 questions related to their knowledge of Canadian income taxes. 

As an interesting note, 47% of respondents were between the ages of 25-44. 

Question 1: Deadline for Income taxes

Did the CRA change the 2021 tax deadline due to COVID-19? Well, if you answered Yes, then you were part of the 49% of respondents that got that question wrong. 

Despite what some might have thought, the deadline for filing income taxes (April 30^th) did not change in 2021.

Question 2: Which types of income must you report when filing your taxes?

With all the new benefits that were introduced due to the Covid-19 pandemic, it may not be surprising that over 64% of respondents failed to correctly identify type of taxable income from the list below: 

• Benefit income (i.e. Employment Insurance, Workers’ compensation, social assistance, etc.)
• COVID-19 benefit amounts (i.e. CERB, provincial or territorial COVID-19 benefits)
• Employment and self-employment income (including commissions and foreign employment income)
• Influencer freebies (including advertising and free vacays)
• Investment income (i.e. interest, dividends, capital gains)
• Pension & savings plan income (i.e. old age security, CPP, QPP)

Spoiler alert: every income mentioned above is taxable and MUST be reported on your income taxes.

Question 3: Which of the following are income tax slips and/or receipts needed to prepare your tax return?

A whopping 66%, or 2 out of every 3 Canadians were able to correctly identify the name of the needed tax documents.

• T2202
• T3
• T4s (including T4, T4A, T4A(OAS), T4A(P), T4E, T4RIF, T4RSP)
• T5s (including T5, T5007, T5008, T5013)

We thought we would throw in item 5 – TMI, Too Much Information – for fun, and yet 9% selected it as a needed tax form! 

Question 4: What should you do if you can’t find your T4 slip? (Select all that apply)

This question had two correct answers (contacting Revenue Canada was one of them). Our goal was to find out whether respondents were aware that they can find all their current and previous tax information (including their T4’s, NOAs, refunds, etc) through the CRA’s MyAccount portal. 

• Contact Revenue Canada
• Contact your employer
• Check CRA’s MyAccount

48% of respondents were not aware that they can in fact access all their tax information through the MyAccount portal. 

Question 5: What are some of the home-office expenses you may be able to claim? (Select all that apply)

With a growing number of Canadians working remotely, we wanted to know if Optimity users were aware of the expenses they could, or could not, claim as part of their “home office”. 

• Cell phone plan
• Home internet
• Mortgage for the house or condo where you live
• Office supplies
• Rent for the house or apartment where you live
• Water, heat, electricity

Less than 9% of respondents identified the correct eligible expenses they can claim on their taxes, which includes all the options except option three: the mortgage for the property you live in.

Question 6: How do you typically file your income taxes?

The last question we asked was less about a right or wrong answer but out of curiosity: Out of the most popular ways to file taxes (listed below) over 52% of respondents elected to do it themselves and filed their taxes electronically using a Certified Tax Software.

• Certified tax software (electronic filing)
• Authorize a representative to file for you
• Community volunteer tax clinic
• Tax preparation service (ie. H&R Block)
• Paper tax return
• Automated phone line (File My Return) 

Based on the previous answers, we were surprised that only 1/3 of respondents used a professional tax representative to file their taxes.

“Filing your taxes can be a complicated and confusing process but it doesn’t have to be. That’s why we were excited to work with Optimity for a survey that gave us the opportunity to communicate directly with Canadians about the simpler experience we’ve built and gain valuable insights to continue our work in designing affordable and accessible products that people love to use,” said Jesse Elliott, Head of Partnerships at Wealthsimple.